WORLD TRADE  
ORGANIZATION  RESTRICTED 
WT/TPR/G/264 
8 May 2012 
 
 (12-2414) 
Trade Policy Review Body Original:  English 
  
 
   
 
TRADE POLICY REVIEW 
 
Report by 
 
CHINA 
 
   
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by China is attached. 
 
 
Note: This report is subject to restricted ci rculation and press embargo until the end of the 
first session of the meeting of the Trade Policy Review Body on China. China WT/TPR/G/264 
 Page 3 
 
 
  CONTENTS 
 
    Page 
I.  INTRODUCTION 5 
II.  ECONOMIC AND TRADE ENVIRONMENT AND MACROECONOMIC POLICY 
DIRECTION  5 
 (1)   ECONOMIC AND TRADE ENVIRONMENT  5  
 (i)   External environment 5  
 (ii)   Domestic situation 6  
 (2)   IMPROVING RELEVANCE , FLEXIBILITY AND PERSPECTIVENESS OF MACROECONOMIC 
POLICY   8 
 (i)   Macroeconomic policy objectives 8  
 (ii)   Fiscal policy 8  
 (iii)   Monetary policy 9  
 (3)   ACCELERATING THE TRANSFORMATION OF ECONOMIC DEVELOPMENT PATTERN  9  
 (i)   Implementing the strategy of expanding domestic demand 10  
 (ii)   Accelerating the development of the service sector 11  
 (iii)   Intensifying efforts for intellectual property rights protection 11  
 (iv)   Advancing energy conservation and pollution reduction and industrial 
restructuring 12  
 (v)   Strengthening further the foundation for the development of agriculture and 
rural areas 13  
 (4)   CONTINUING TO DEEPEN THE REFORM STEADFASTLY  13  
 (i)   Establishment of the socialist system of laws with Chinese characteristics 13  
 (ii)   Reform of the administrative system 14  
 (iii)   Reform of state-owned enterprises and development of the non-public sector 14  
 (iv)   Reform of fiscal and taxation system 15  
 (v)   Reform of the RMB exchange rate regime 15  
 (vi)   Reform of the social security an d medical and healthcare systems 16  
III.  TRADE AND INVESTMENT DEVELOPM ENT AND RELATED POLICIES 17  
 (1)   TRADE AND INVESTMENT DEVELOPMENT  17  
 (i)   New trend in trade development 17  
 (ii)   Inward and outbound foreign direct investment 18  
 (2)   PROMOTING BALANCED AND SUSTAINABLE DEVELOPMENT OF TRADE AND 
INVESTMENT  19  
 (i)   Striving to balance the growth of imports and exports 19  
 (ii)   Accelerating the transformation of fo reign trade development pattern 20  
 (iii)   Improving trade financing and trade facilitation 21  
 (iv)   Promoting the growth of outbound investment 21  
 (3)   OPTIMIZING THE UTILIZATION OF FOREIGN INVESTMENT THROUGH FURTHER 
OPENING UP 22  
 (i)   Foreign investment policy direction 23  
 (ii)   Opening up more fields to foreign investment 23  
 (iii)   Improving further the licensing regime for foreign investment 24  
 (iv)   Caring for and protecting rights and interests of investors 24  
 (4)   CONSTRUCTING ECONOMIC AND TRADE PARTNERSHIPS BASED ON MUTUALLY 
BENEFICIAL AND WIN-WIN PRINCIPLE  24  
 (i)   Committed to advancing the Doha Development Agenda 25  
 (ii)   Safeguarding the multilateral trading system with concrete actions 26 WT/TPR/G/264 Trade Policy Review 
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 (iii)   Promoting regional and bilateral cooperation 27  
 (iv)   Enhancing South-South cooperation 27  
 (5)   CONTRIBUTION OF THE TRADE DEVELOPMENT OF CHINA TO THE WORLD ECONOMY  28  
 (i)   Promoting the growth of the world economy 28  
 (ii)   Improving the welfare of the people in all countries 28  
 (iii)   Providing broad market for trading partners 28  
IV.  THE WAY FORWARD 29  
 
 
 China WT/TPR/G/264 
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  I. INTRODUCTION 
1. Since the last trade policy review in 2010, in the face of the complex and volatile external 
environment and new circumstances and developments  in economic situations at home, the Chinese 
Government, centered on the goal of maintaining strong, sustainable and balanced growth, has 
accelerated the transformation of economic deve lopment pattern, stepped up efforts to expand 
domestic demand, promoted structural adjustme nt, and continued deepening the reform and 
expanding opening up.  The national economy con tinued to develop at a rapid yet steady pace, 
making important contributions to the wo rld economic recovery and development. 
2. The development of China's foreign trade a nd cross-border investment saw a new trend. 
China's opening up began to shift from being a pr edominantly export-oriented economy and relying 
heavily on inward foreign direct investment to putting equal emphasis on e xports and imports as well 
as on both attracting foreign capital and making out ward investment.  The Chinese Government has 
proactively promoted the change of the trade deve lopment pattern, intensified efforts to optimize the 
use of foreign capital, continued to implement the st rategy of "going global", and paid more attention 
to balance and sustainability in the development of both trade and investment. 
3. The Chinese Government continues to develop foreign economic and trade relations in an 
all-round way. China is willing to  conduct cooperation pragmatically  with all countries and regions, 
large or small, rich or poor, in  multilateral, regional and bilateral frameworks to draw on each other's 
merits for complementation, to bring into play  each other's respective advantages and to achieve 
mutual benefits and win-win results.  The multilatera l trading system is the cornerstone of China's 
foreign economic and trade relations.  The Chinese Government spares no efforts to push forward the 
Doha Development Agenda and safeguards the multilater al trading system with concrete actions.  At 
the same time, the Chinese Government steadily promotes bilateral and regional relations and 
continuously enhances the South-South cooperation. 
II. ECONOMIC AND TRADE ENVIRONMENT AND MACROECONOMIC POLICY 
DIRECTION 
(1) ECONOMIC AND TRADE ENVIRONMENT  
(i) External environment 
4. Since the last review, the economic and trade de velopment in China has been impacted by a 
complicated and unfavorable external environment.  The international financ ial crisis worsens, and 
the spreading sovereign debt crisis of some countri es is not to be effectively resolved in the short 
term.  Major developed economies are plagued with high unemployment and insufficient growth 
momentum, while many developing countries face the dual pressures of inflation and declining 
economic growth.  The world economy slows down its  recovery process with unstable and uncertain 
factors growing, and the global trade becom es weak and its growth rate setting back. 
5. Influenced by unconventional monetary po licies of different countries including the 
"quantitative easing", the exchange rates of major cu rrencies on the international market are much 
volatile, and commodity prices fluctuate more at high levels, thus driving up the cost of imports and 
increasing significantly the pressure of imported infl ation.  Developed countries call for moving-back 
of manufacturing sectors from overseas, and the co mpetitiveness of labor-intensive industries in 
developing countries increases.  This leads to more intense international competition, and from time 
to time protectionism in various forms emerges. WT/TPR/G/264 Trade Policy Review 
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  (ii) Domestic situation 
6. China is a developing country facing arduous deve lopment tasks for a long time.  It has to 
strive not only to raise further the level of the per capita income, which is still low, but also to resolve 
various outstanding problems that the development is not yet balanced, coordinated and sustainable.  
This manifests itself mainly in the following:  growing resource and envi ronmental constraints on 
economic growth, imbalance between investment a nd consumption, large income gap, insufficient 
scientific and technological innovation capabilities, imba lanced industrial structure, weak agriculture 
foundation, uneven development be tween urban and rural areas and between regions, the coexistence 
of overall pressure to expand employment and struct ural shortage of qualified personnel in some 
sectors.  Such basic national conditions have not  seen and cannot see a fundamental change simply 
because of China's success in economic developm ent in a relatively short period of time.  
7. Since reform and opening up in the late 1970s, China has solved the problem of adequate 
food and clothing for over 200 million impoverished people, and realized the UN Millennium Development Goals of eradicating poverty and hunger ahead of time.  In the first ten years of the 
21
st century, China's poverty line increased from ¥865 in  2000 to ¥1,274 in 2010, and the number of 
people in dire poverty decreased from 94.22 million in 2000 to 26.88 million in 2010.  In 2011, the 
Chinese Government promulgated the Outline for Development-Oriented Poverty Reduction for 
China's Rural Areas (2011-2020) to implement th e new national poverty line of ¥2,300 (constant 
prices in 2010).  Under this standard, China now  has a poverty-stricken population of 122 million. 
8. In China's economic performance in the past tw o years, there were some new developments 
deserving a high degree of attention.  While th e economy generally witnessed stable and rapid 
development, signs of downward pressure also emerged.  At the same time, despite that the price level somewhat dropped after hitting several highs, the deeply-seated factors contributing to inflation were not eradicated fundamentally.  The upward trend of labor cost is more pronounced, and the rise in 
costs of resources, land and other factors of producti on becomes inevitable.  The pressure of price rise 
will exist for a long term in China.  
9. During 2010 and 2011, China's gross domestic product (GDP) achieved stable and rapid 
growth, but the growth rate was gradually slowin g down.  Calculated at comparable prices, the 
year-on-year increase of GDP in 2010 by each quarter was 12.1%, 10.4 %, 9.7% and 9.9% 
respectively, and the figures in 2011 were 9.7%, 9.5%, 9.1% and 8.9% respectively (Chart 1:  China GDP Year-on-Year Growth Quarterly 2010-2011).  
10. China's consumer price index (CPI), after co ming back to growth from drop on year-on-year 
basis at the end of 2009 along with the recovery of the economy, began to move up faster each quarter 
in 2010, registering an increase by 2.2% in the fi rst quarter, 2.9% in the se cond quarter, 3.5% in the 
third quarter, and 4.7% in the fourth quarter.  In 2011, the CPI growth continued, hitting 5.0% in the 
first quarter, 5.7% in the second quarter, and reaching a peak of 6.2% in the third quarter.  In the 
fourth quarter, the CPI rise came down to 4.6% (Chart 2: China CPI and Year-on-year Growth 
Quarterly 2010-2011).  In the past two years, the industrial producer price index (PPI) also kept a rapid-rising momentum, and the growth declined only in the fourth quarter in 2011.  
11. In terms of labor cost, 30 provinces, municipa lities and autonomous regions in China adjusted 
upward the minimum wages in 2010, with an aver age increase in the monthly minimum wages by 
22.8%.  After the adjustment, the minimum wage in Shanghai was the highest nationwide, being 
¥1,120 per month.  In 2011, 25 provinces, muni cipalities and autonomous regions adjusted their 
minimum wages, with the average increase being 22 %.  The monthly income of migrant workers on China WT/TPR/G/264 
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  average grew from ¥875 in 2005 to ¥1,417 in 2009, with an average annual growth of 15.5%.  The 
figure went up to ¥1,690 in 2010, and further up to ¥2,049 in 2011.  
12.1 
10.4 
9.7 9.9 9.7 9.5 9.1 8.9 
02468101214
GDP year-on-year
growth quarterly %
Source:   National Statistics Bureau.Chart 1
China GDP Year-on-Year Growth Quarterly 2010-11
 
 
102.2 102.9 103.5 104.7 105.1 105.7 106.3 
104.6 
2.2 2.9 3.5 4.7 5.0 5.7 6.2 
4.6 
1234567
100101102103104105106107
CPI quarterly
(left)
CPI year-on-yeargrowth quarterly
% (right)
Source:   National Statistics Bureau.Chart 2
China CPI and Year-on-Year Growth Quarterly, 2010-11
 
 WT/TPR/G/264 Trade Policy Review 
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  (2) IMPROVING RELEVANCE , FLEXIBILITY AND PERSPECTIVENESS OF MACROECONOMIC 
POLICY  
(i) Macroeconomic policy objectives 
12. Since the last review in 2010, in response to the changing situations at home and abroad, the 
Chinese Government has continued to consolidate a nd expand the positive results achieved in dealing 
with the impact of the international financial crisis, and continuously improved the relevance, 
flexibility and perspectiveness of macroeconomic  policy.  While striving for recovery and 
stabilization of the economic growth rate, it also promoted the shift of the economic growth from 
being based on policy stimulus to internal dynami sm.  The key of the policy has been to achieve 
balancing in the relationships among ensuring st eady and robust economic growth, adjusting the 
economic structure, and managi ng inflation expectations.  
13. In 2010, the Chinese Government maintained  continuity and consistency of the 
macroeconomic policy adopted since the outbreak of the international financial crisis, and continued 
to implement the proactive fiscal policy and moderate ly easy monetary policy in a bid to consolidate 
the good recovery momentum of the economy.  In 2011, in the light of the new developments and 
characteristics in domestic and international situ ations, the Chinese Government set as the primary 
objective of its macroeconomic policy to keep the overall prices basically stable, and while 
implementing a proactive fiscal policy, it steered its monetary policy from moderately easy to prudent, to prevent large economic fluctuations.  
14. In March 2011, the Fourth Session of the 11
th National People's Congress approved the 
Outline of the 12th Five-Year Plan for National Economic a nd Social Development of the People's 
Republic of China (referred to as the "12th Five-Year Plan").  The 12th Five-Year Plan proposes that 
within the five years from 2011 to 2015, China will continue to maintain steady and rapid economic 
development on the basis of significantly improving the development quality and efficiency.  It also 
identifies ten policy directions for economic and social development, namely to strengthen and 
improve macro policy direction, set up the perm anent mechanism for boosting consumption, adjust 
and optimize investment structure, promote i ndustrialization, urbani zation and agricultural 
modernization simultaneously, a dvance industrial upgrading through scientific and technological 
innovation, promote coordinated and mutually reinforcing developmen t among regions, enhance 
incentive and restraining mechanis ms for energy conservation and emission reduction, advance the 
equalization of basic public services, accelerate the income increase of urban and rural residents, and 
strengthen and make innovations in social administration.  
(ii) Fiscal policy 
15. To maintain the sustainability of the developm ent, the Chinese Government always adheres to 
the policy of keeping the level of fiscal deficit unde r control.  In 2010 and 2011, under the proactive 
fiscal policy, the government budget arranged a moderate  level of deficit.  However, the share of the 
deficit in GDP was reduced from 2.8% in 2009 to 2.5%  in 2010.  In 2011 the share further declined to 
1.8%.  The outstanding balance on government debt  in the central budget was ¥6,754.811 billion at 
the end of 2010, and ¥7,204.451 billion at the end of 2011, with the share in GDP decreasing from 
16.8% to 15.3%. 
16. The structure of fiscal expenditure was furthe r optimized.  The Government continued to 
increase spending on agriculture, rural areas and fa rmers, in less developed areas, on education, 
healthcare, social security, low-income housi ng, and environmental protection.  During the China WT/TPR/G/264 
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  11th Five-Year Plan period (2006-2010), public spending on healthcare and social security increased 
by 2.8 times and 1.3 times respectively compared with the 10th Five-Year Plan period (2001-2005).  
These changes in the structure of fiscal expenditu re are of great significance to achieving the long-
term sustainable economic and social development in China.  
17. The Chinese Government continued to introd uce structural tax reductions.  In 2010, the 
purchase tax for passenger vehicles with a displacement of 1.6 liters or less was levied at the reduced 
rate of 7.5%.  From 2010 to 2 015, for small and low-profit enterprises with yearly payable tax 
amounting to ¥60,000 or less, the taxable income is reduced to 50% of its income, and the enterprise 
income tax is levied at a reduced tax rate of 20%.  On 1 November 2011, the revised Detailed Rules 
for the Implementation of the Provisional Regula tions on Value-Added Tax and the Detailed Rules 
for the Implementation of the Provisional Regulati ons on Business Tax raised the value-added tax and 
business tax thresholds of self-employed industrial and commercial households.  In addition, personal 
income tax cuts were implemented, and taxation sy stem reform was further advanced to promote the 
development of the service sector. 
(iii) Monetary policy 
18. In terms of monetary policy, in the past tw o years, the People's Bank of China strived to 
achieve an equilibrium among the policy objectives of the currency value stability, economic growth, 
full employment and balance of payments in th e light of the primary challenges in economic 
development in different periods , and handled satisfactorily the relationships among sustaining 
economic development, containing infla tion and preventing financial risks.  
19. In 2010, the People's Bank of China continue d to implement a moderately easy monetary 
policy.  At the same time, as the momentum of ec onomic recovery was steadily gaining ground, it put 
emphasis on making the policy more targeted, flexib le and forward-looking, and guided the monetary 
conditions to return step by step from anti-crisis state to normal.  In 2011, a prudent monetary policy 
was pursued.  In the first three quarters, under the ever-increasing inflation pressure, the People's 
Bank of China guided the steady slowdown of money and credit growth by using a variety of policy 
tools.  In the fourth quarter, with the short-term capital flows having experienced some shift as a result 
of international situations including the worseni ng of the European debt crisis, the slowdown of 
economic growth on the domestic front and the fallb ack of price rise, monetary policy was timely 
fine-tuned accordingly and market liquidity was a ppropriately increased to maintain the overall 
moderate level of money and credit supply.   
(3) ACCELERATING THE TRANSFORMATION OF ECONOMIC DEVELOPMENT PATTERN  
20. In response to the international financial cris is, the Chinese Government further realized the 
importance and urgency of transforming the econo mic development pattern to the robust and 
sustainable economic development and the construc tion of a moderately prosperous society.  
Therefore, in the past two years, the Chinese Gove rnment performed more proactively in balancing 
and coordinating the speed of economic growth and the transformation of economic development 
pattern, and pushed forward transformations in the course of development and sought further 
development amidst transformations.  The pace of  transformation of economic development pattern 
was accelerated, and the comprehensiveness, coordina tion and sustainability of the development were 
further enhanced.  WT/TPR/G/264 Trade Policy Review 
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  (i) Implementing the strategy of expanding domestic demand 
21. Expanding domestic demand, particularly cons umer demand, is essential to long-term steady 
and robust economic development in China.  It is  a long-term policy that the Chinese Government 
will adhere to.  In 2010, the Chinese Government  continued to implemen t consumption stimulus 
programs such as the programs for rural residents to purchase home appliances and motor vehicles 
and motorbikes, for people to trade in old motor vehicles and home appliances for new ones, and for 
use of energy-efficient products.  The Chinese Government also continued to improve the 
consumption environment and expa nd consumption in new areas by measures such as upgrading rural 
and community commercial facilities, promoting consumption facilitation and encouraging credit 
consumption.  In the meantime, in view of the fact  that some of the programs introduced in the course 
of addressing the international financ ial crisis were to be phased out , introduction of new policies for 
promotion of consumption was under study to facilit ate and benefit people, with the general policy 
direction being green, low carbon, energy saving and environment protecting.  
22. Meanwhile, the Chinese Government paid more attention to setting up permanent mechanism 
for boosting consumption, vigorously adjusted income distribution, increased the incomes of low and 
middle-income groups to expand the share of middle- income groups in the population and to enhance 
people's ability to consume.  
23. On 1 September 2011, China began to implem ent the newly revised Personal Income Tax 
Law and the Regulations on the Implementation of the Personal Income Tax Law.  The wage and 
salary threshold for personal income tax was ra ised from per capita ¥2,000 per month to ¥3,500, the 
tax rates for wage and salary income were simplifie d from nine grades to seven  grades, and the lowest 
rate in the progressive tax rates reduced from 5% to 3%.  The tax rates for income from production 
and business operation by self-employed industrial a nd commercial households were also adjusted, 
which effectively reduced the tax burdens on self-e mployed industrial and commercial households 
and investors in individual pr oprietorship enterprises and part nership businesses.  The personal 
income tax cut was to play an important and pos itive role in adjusting income distribution and 
enhancing the spending power of the people. 
24. In addition to significantly lowering persona l income tax and raising minimum wages, 
starting from 1 January 2011, the basic pension of enterprise retirees under the basic pension 
insurance scheme for enterprise employees was again increased, registering an average of 10% rise 
from the level in 2010 and benefiting more than 57 million people.  Prior to this increase, the basic 
pension of enterprise retirees had been raised for six consecutive years from 2005 to 2010, thus 
having doubled cumulatively. 
25. China's domestic consumer market continued to grow rapidly over the past two years.  The 
total retail sales of consumer goods reached ¥15. 70 trillion in 2010, and ¥18.39 trillion in 2011, a 
year-on-year increase of 18.3% and 17.1% respecti vely.  After adjustment for price changes, the 
increases in real terms were 14.8% and 11.6% respectively.  Throughout the 11th Five-Year Plan 
period, the annual growth rate of retail sales in Chin a was more than 10% per year in real terms after 
taking  price factors into consideration. 
26. While striving to expand c onsumer demand, the Chinese Government also attaches 
importance to the positive role of a rational growth  of investment.  At present, priorities of public 
investment arranged in the central budget include low-income housing, water conservancy, rural 
livelihood projects and rural infrastructure, education,  healthcare and other social services, as well as 
energy conservation, emission reduction, environmenta l protection, major infrastructure projects etc.  China WT/TPR/G/264 
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  Private investment is also very active.  In 2011,  compared to the 23.6% increase in the total fixed 
assets investment of the whole country, private investment increased by 34.3%.  These investments have played an active role in maintaining invest ment demand and promoting economic growth.  They 
also consolidate in a long run the basis fo r China's economic and social development. 
27. In 2010 and 2011, China's GDP increased 10.4% and 9.2% year-on-year respectively.  In the 
growth, final consumption contributed 4.3 percen tage points and 4.7 percentage points, capital 
formation contributed 5.5 percentage points and 5 percentage points, and net exports contributed 
0.6 percentage points and minus 0.5 percentage points.  It is fair to say that domestic demand played a 
leading role in promoting China's economic developmen t in recent years.  The roles of investment and 
consumption tended to be more ba lanced, and that of the consum er demand became more prominent 
in boosting the economy. 
(ii) Accelerating the development of the service sector 
28. Accelerating the development of the service sector  is a major task in China's transformation 
of the pattern of economic development and restruct uring of the economy.  Since the last review, the 
Chinese Government has continued the efforts to strengthen a policy and institutional environment 
condusive to the development of the service sector, and launched on pilot basis the tax reform aiming 
at boosting the service sector.  The Chinese Government  has also strived to establish fair, standardized 
and transparent market access c onditions to encourage the participation of private capital and 
non-public economy in services sectors, and proposed  a series of guidance on the development of 
such specific services sectors as medical services , high-tech services, energy-saving services, 
logistics, accounting services, housekeeping ser vices, e-commerce, inland shipping etc. 
29. In 2010, China's tertiary sector realized an added value of ¥17.36 trillion, an increase of 9.8% 
over that of 2009, accounting for 43.2% of the GDP, 0.2 percentage points lower than the previous 
year.  In 2011, the tertiary sector registered an added value of ¥20.33 trillion, a year-on-year increase 
of 8.9%, accounting for 43.1% of GDP.  In general,  contribution to GDP from the tertiary sector is 
still comparatively low, and the development of the service sector requires more arduous efforts. 
(iii) Intensifying efforts for intellectual property rights protection 
30. Strengthening intellectual property rights (IPRs) protection has always been an important part 
of the work of the Chinese Government to accelerate the construction of an in novative country.  China 
has gone through a course of IPRs protection in 30-odd years which took several hundred years in developed countries, and has achieved remarkab le accomplishments.  However, due to the 
contemporary conditions of China as a large devel oping country, infringements of IPRs still exist, 
which disturb the order of market economy and di srupt competitiveness and innovation enthusiasm of 
enterprises. 
31. Since the last review, with respect to IPRs  protection, the Chinese Government on the one 
hand has concentrated efforts on strengthening enforc ement to solve prominent problems, carrying out 
special campaigns of cracking down on infringements and counterfeits.  On the other hand, it has 
advanced the construction of long-term mechan ism for IPRs protection and actively fostered 
favourable legal environment, market environment and social environment. 
32. From October 2010 to June 2011, the Chinese Government launched a special enforcement 
campaign nationwide aiming at cracking down on infringing IPRs and manufacturing and selling counterfeit commodities.  A leading group headed by Vice Premier Wang Qishan and involving 
26 government agencies was established for the cam paign, and Premier We n Jiabao convened the WT/TPR/G/264 Trade Policy Review 
Page 12 
  
  national video conference on IPRs protection and enforcement to give assignments.  Based on the 
results of the campaign, in November 2011, th e State Council issued the Opinions on Further 
Cracking Down on Infringements of Intellectual Property Rights and Manufacturing and Selling of 
Counterfeit Commodities, and decided to establish a permanent leading group to improve further the 
long-term mechanism for protection of IPRs.  Th e leading group is headed by Vice Premier Wang 
Qishan and involves 29 government agencies, i ndicating that the government regards crackdown on 
infringements of intellectual prope rty rights and manufacturing and selling of counterfeit commodities 
as a long-term task and will never slacken its efforts.  
33. In 2010 and 2011, China amended a number of laws and regulations concerning IPRs, 
including for example the Copyright Law and Regu lations on the Customs Protection of Intellectual 
Property Rights.  The Supreme People's Court, the Supreme People's Procuratorate and the Ministry of Public Security released the Opinions on Ce rtain Issues Concerning Application of Law in 
Handling Criminal Cases Related to the Infringement  of Intellectual Property Rights, providing more 
explicit guidance for criminal enforcement issues and improving the connection between administrative enforcement and criminal justice.  
34. The Chinese Government also carried out a ser ies of publicity activities concerning IPRs 
protection, including exhibitions on the achievements of the special campaign on cracking down on infringements of intellectual prope rty rights and manufacturing and selling of counterfeit commodities 
and the nationwide Intellectual Property Rights Protec tion Week in 2010 and 2011, in a bid to further 
raise the awareness of IPRs protection in the soci ety, to mobilize the general public to support and 
participate in IPRs protection, and to create a s ound public opinion environment and favourable social 
conditions for the building of  an innovative country. 
(iv) Advancing energy conservation and pollution reduction and industrial restructuring 
35. In the face of increasingly aggravating resources and environmental constraints in the course 
of economic development, the Chinese Government has always considered pushing forward energy 
conservation and pollution reduction and accelerating industrial restructuring as important tasks in 
promoting the transformation of the pattern of econom ic development.  Over the past two years, to 
protect the ecological environment, address global climate change and realize sustainable economic and social development, the Chinese Government further intensified measures and policies to close 
down outdated production facilities and restrict  exploitation of non- renewable resources. 
36. In closing down outdated production capacities for the purpose of conserving energy and 
reducing pollution, the Chinese Government set and implemented explicit bindi ng targets.  In 2010, 
highly energy consuming and polluting produc tion facilities with the total capacities of 
11.86 million tonnes in steel industry, 41 million tonnes in iron-smelting industry, 140 million tonnes 
in cement industry and 5.39 million tonnes in pape r industry were shut down.  In 2011, outdated 
production capacities of another 31.22 million tonnes in iron-smelting industry, 150 million tonnes in 
cement industry and 19.25 million tonnes in coke industry were further eliminated.  During the 
11
th Five-Year Plan period, China's energy consumption per unit of GDP fell by 19.1%, sulfur dioxide 
emissions and chemical oxygen demand decreased by 14.29% and 12.45% respectively. China has 
undertaken obligations compatible with its de velopment stage in addressing the global climate 
change.   
37. For industries seriously damaging resources and environment and already having surplus 
production capacities, the access standards in resp ect of technology, production scale, ecological 
protection, energy conservation and consumption redu ction and safety production were further raised.  China WT/TPR/G/264 
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  More strict protective exploitation policies and e nvironment protection standards were adopted on 
non-renewable resources such as bauxite, tungsten,  antimony, tin and rare earth, and the total 
exploitation and producti on volumes were strictly controlled, in order to protect resources and 
ecological environment and promote reasonable and efficient exploitation and utilization. 
(v) Strengthening further the foundation for the development of agriculture and rural areas 
38. The sound development of agriculture and rural ar eas is of great significance to the long-term 
steady and sustainable economic and social developmen t in China.  The Chinese Government will, in 
accordance with the requirements on narrowing the gap between urban and rural areas and improving 
the balance between urban and rural development,  continue the implementation of the "pay-back" 
policies and further strengthen the support for agricu lture, rural areas and farmers so as to constantly 
promote agricultural modernization in the course of industrialization and urbanization, improve 
production and living conditions in  rural areas, increase incomes of farmers, consolidate and 
strengthen the foundation for the development of agri culture and rural areas and create conditions for 
sustainable, rapid and coordinated economic and social development. 
39. In 2010 and 2011, China's per capita net income of rural residents r eached ¥5,919 and ¥6,977 
respectively, a year-on-year increase in real terms of 10.9% and 11.4% after adjustment for price rise. 
It was the first time since 1998 that the income grow th of rural residents outpaced the growth of per 
capita disposable income of urban residents, a nd in two consecutive years the difference was higher 
by 3 percentage points.  By 2011, China's urbaniza tion level exceeded 50%, marking a historic change 
in the country's social structure. 
(4) CONTINUING TO DEEPEN THE REFORM STEADFASTLY  
40. Reform is China's basic state policy.  The Chinese Government handles properly the 
relationships among reform, devel opment and stabilization, steadily and steadfastly advances the 
reform and eradicates obstacles embedded in various systems and mechanisms constraining development and constantly improves the socialist market economy, so as to provide a great driving 
force for acceleration of the transformation of the economic growth pattern and for promotion of the 
comprehensive, balanced and sustaina ble economic and social development. 
(i) Establishment of the socialist system of laws with Chinese characteristics  
41. Rule of law is a fundamental principle for Ch ina to effectively govern the country.  China 
needs to bring into being a comprehensive system of  laws with Chinese characteristics so as to ensure 
that there are laws to abide by for the carrying on of state affairs and social life.  This is a precondition 
and foundation for China to implement the fundamenta l principle of rule of law and an institutional 
guarantee for China's development and progress. 
42. By the end of 2011, in addition to the curre nt Constitution and its Amendments, China has 
239 laws, 714 administrative regulatio ns, and over 8,900 local regulations in force.  As a result, all 
legal branches in the system have been set up, cove ring all aspects of social relations.  In each legal 
branch, basic and major laws have been enacted, and related administrative regulations and local 
regulations are fairly complete.  Furthermore, with the major overhauls of the laws and regulations in 
past years, in particular the latest one carri ed out since 2009 by the Standing Committee of the 
National People's Congress, the State Council, an d local people's congresses and their standing 
committees to ensure uniformity of the national le gal system, the problems of incompatibility among 
laws and regulations have largely been sorted out.  A socialist system of laws with Chinese 
characteristics has been solidly put into place. WT/TPR/G/264 Trade Policy Review 
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  (ii) Reform of the administrative system 
43. In July 2010, the State Council issued the D ecision on the Fifth Batch of Administrative 
Licensing Items to be Cancelled or Delegated to  Local Government Authorities, which abolished 
113 administrative licensing items and delegated a nother 71 items to local government authorities, 
moving forward the reform of the administrative licensing system and promoting the change of 
government functions. 
44. In October 2010, the State Council issued the Opinions on Strengthening the Construction of 
a Law Based Government to advance rule of law in an all-round way and push forward construction 
of a law-based government.  The Opinions pointed out, among others, that rules and administrative 
measures should be overhauled regular ly and the results made public.  When administrative measures 
having direct impact on rights and obligations of c itizens, legal persons or other organizations are 
formulated, opinions of the general public should be  solicited and legitimacy review be conducted by 
the legislative affairs authorities in the government.  Review upon filing and registration of rules and 
administrative measures should be strengthened, in particular on those that may illegally increase the 
obligations of citizens, legal pers ons and other organizations or aff ect their legitimate interests, and 
also those that may establish local or sectoral protectionism.  Efforts in disclosing government 
information should be intensified, with disclosur e being the general rule while non-disclosure being 
exception.  The Opinions also proposed that wo rk on administrative reconsideration should be 
enhanced and response to administra tive litigation be further improved. 
(iii) Reform of state-owned enterprises and development of the non-public sector 
45. Supporting the development of SMEs, especially sm all low-profit enterprises, is an important 
part of the work of the Chinese Government to promote the common development of economic 
entities of diverse forms of ownership.  In addition to  the structural tax reductions in favour of small 
low-profit enterprises, the Chinese Government expa nded the funds for promoting the development of 
SMEs.  It will also continue making efforts in broadening financing channe ls of SMEs, gradually 
expanding the size of issuance of collection notes, co llection bonds and short-te rm financing bills by 
SMEs, and actively and steadily introducing private equity investments and other financing vehicles. 
46. After promulgating in September 2009 the Opin ions on Further Promoting the Development 
of SMEs, the State Council issued the Opinio ns on Encouraging and Guiding the Healthy 
Development of Private Investment in May 2010, pr oposing that private capital is encouraged to enter 
sectors and fields the access of which is not explicitly prohibited by law.  These include 
infrastructures, public utilities, national defence industr ies and service sectors such as finance, culture, 
education, sports and medical care etc.  The Opini ons also proposed that investment access thresholds 
and conditions should be set in a st andardized manner to create a market  environment in favour of fair 
competition and equal access of economic entities under diverse forms of ownership.  Currently, more detailed rules on entry of private capital into relate d sectors and fields are being worked out, and they 
are supposed to be promulgated later in 2012 acco rding to the requirement of the State Council. 
47. Reform of state-owned enterprises (SOEs) in Ch ina, after going on for more than 20 years, 
now enters a stage focusing on restructuring of larg e SOEs.  The direction of further deepening the 
reform is to accelerate the introduction of corporat e and share-holding systems, realize diversification 
of investors, and push forward entir e listing of those qualified large SO Es.  For those not yet ready for 
entire listing, reform on diversification of ownership should speed up.   China WT/TPR/G/264 
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  48. By the end of 2011, the number of SOEs fo r which the State-owned Assets Supervision and 
Administration Commission of the State Council (SASAC) performed the responsibilities of an investor (central SOEs) had further decreased to 117 from 128 at the time of the last review, and more 
than 80% of these enterprises, their subsidiaries included, had implemented share-holding system 
reform through corporatization.  In 2005, the firs t batch of 7 central SOEs as wholly state-owned 
companies began the reform on a trial basis to estab lish standard board of directors.  As of the 
beginning of 2012 standard board of directors has been in place in 42 central SOEs, with external 
directors accounting for more than 50% of all the directors.  The systems of external directors and of the standard operation of board of directors have been gradually improved.  Furthermore, reform 
concerning the budget system for operations of stat e capital was advanced in 2011 with its scope 
further expanded and the proportion of profits of ce ntral SOEs from state capital operations to be 
collected by the central government further increased. 
(iv) Reform of fiscal and taxation system 
49. With respect to the fiscal system, after years of reform, the Chinese Government has put in 
place a basic framework of a government budget syst em that comprises budget for public finance, 
budget for government-managed funds and budget for state capital operations.  The budget for social 
security funds has also been compiled since 2010 on a tr ial basis.  Fiscal transp arency has also been 
constantly improved. 
50. Reform of the taxation system continued to advance quickly over the past two years.  On 
1 December 2010, the urban construction and mainte nance tax and the education surcharge began to 
be applied equally for Chinese and foreign-invested enterprises and individuals.  The taxation system 
for Chinese and foreign-invested enterprises and indivi duals in China was thus finally unified.  In 
2011, the municipalities of Shanghai and Chongqing launched the pilot program of collecting real 
estate tax on individual properties.  In 2012, ne w vehicle and vessel tax and tonnage tax were 
implemented. 
51. Reform of the resource tax system was launc hed.  The Provisional Regulations on Resource 
Tax was amended and came into fo rce on 1 November 2011.  For calculation and levy of resource tax, 
in addition to the amount-on-volume (specific) method, the rate-on-price ( ad valorem ) method was 
introduced.  The specific resource tax on cr ude oil and natural gas was changed to ad valorem  
resource tax.  For rare earth and some other prod ucts still subject to specific resource tax, the tax 
amount was adjusted.  Reform of resource tax system was of great importance to promote 
conservation, reasonable and efficient exploitati on and utilization of resources, protection of 
ecological environment and sustainable economic and social development.  
52. Reform of the value-added tax system was also  further deepened.  The pilot reform program 
of levying value added tax in lieu of business tax was implemented in the transportation and some 
other services sectors in Shanghai on 1 January 2012 .  The reform aimed at addressing the issue of 
double taxation of goods and services in the curre nt taxation system, reducing tax burdens of 
enterprises and promoting the development of the ser vice sector.  It was of great significance for the 
adjustment of economic structure and for the so und and balanced devel opment of the national 
economy. 
(v) Reform of the RMB exchange rate regime 
53. On 21 July 2005, China began to implement th e managed floating foreign exchange rate 
system based on market demand and supply and in refe rence to a basket of currencies.  Henceforth, WT/TPR/G/264 Trade Policy Review 
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  the reform of the RMB exchange rate regime has been pushed forward in an orderly way, and the 
flexibility of RMB exchange rate has been constantly  enhanced.  In 2008 induced by the outbreak of 
the global financial crisis, a number of other majo r currencies depreciated significantly against the 
U.S. dollar.  The floating range of the RMB excha nge rate was narrowed and the RMB exchange rate 
remained basically stable.  This helped to stabili ze market expectations, demonstrated China's efforts 
to promote a balanced global economy, and contribute d to the economic recovery in Asia and in the 
world at large.   
54. As the momentum of global economic recove ry emerged and the foundation for China's 
economic upturn became more solid, on 19 June 20 10 the Chinese Government decided to proceed 
further with the reform of the RMB exchange rate  regime and to enhance the RMB exchange rate 
flexibility, with the emphasis being placed on reflec ting market supply and demand with reference to 
a basket of currencies.  Since then, the RMB exchange rate has moved in both directions and 
appreciated slightly with greater flexibility, an d the expectations for the RMB exchange rate 
remaining stable.    
55. At the end of 2011, the central parity of the RMB against the U.S. dollar stood at ¥6.3009 per 
U.S. dollar, appreciating by 5.11% compared with that at the end of 2010;  the central parity of the 
RMB against the euro and yen were ¥8.1625 per euro and ¥8.1103 per hundred yen, up by 7.89% and 0.19% respectively over the level at the end of 2010.  According to the Bank for International 
Settlements (BIS), in 2011 the nominal effective RM B exchange rate appreciat ed by 4.95%, and the 
real effective exchange rate appreciated by 6.22%.  From the start of the reform of the RMB exchange 
rate regime in 2005 to December 2011, the nominal  effective RMB exchange rate appreciated by 
21.16% and the real effective exchange rate appreciated by 30.46%. 
56. China's balance of payment account has moved closer to equilibrium, and the ratios of 
commodity trade surplus and current  account surplus to the GDP have  been declining and are within 
the internationally acknowledged normal level.  China's commodity trade surplus in 2010 accounted 
for 3.0% of the GDP, and in 2011 it declined to 2.1%.  China's current account surplus in 2010 
accounted for 5.0% of the GDP, in 2011 it dropped to  2.8%.  Moving toward equilibrium of the 
balance of payments has promoted balance betw een supply and demand in the foreign exchange 
market and also differentiation of the expectations  of the RMB exchange rate.  The RMB exchange 
rates are moving towards an equilibrium level.  Sin ce the fourth quarter of 2011, expectations of the 
RMB exchange rate have moved in both directions  of appreciation and depreciation as shown in the 
quotations in the overseas RMB Non-Delivery Forwar d (NDF) market, which is also an indication 
that the RMB exchange rates are approaching an equilibrium level.  
(vi) Reform of the social security a nd medical and healthcare systems 
57. Progress of the reform of the social security  and healthcare systems plays an irreplaceable 
role in improving people's livelihood, boosting dom estic demand and realizi ng long-term coordinated 
and sustainable economic and social development in China.  Since the last review, China's 
construction of the social security system has furt her accelerated, and its coverage greatly expanded.  
By the end of 2011, the pilot program of the new pe nsion insurance for rural residents initiated in 
2009 had covered more than 60% of China's counties.  On 1 July 2011, the pilot program of the pension insurance for non-working urban residents w as launched, which indicated that the framework 
of China's basic pension insurance sy stem had basically been completed. 
58. In the reform of medical and healthcare system , new breakthroughs have also been achieved. 
Nearly 1.3 billion people have subscribed to either the basic medical insurance for urban workers, or China WT/TPR/G/264 
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  the basic medical insurance for non-working urban residents, or the new rural cooperative medical 
care system, covering more than 95% of all the urba n and rural residents.  The national system for 
basic drugs is largely in place, the primary-le vel medical and healthcare system improved, and 
progress has also been made in providing equal access to basic public health services. 
III. TRADE AND INVESTMENT DEVELOPMENT AND RELATED POLICIES 
(1) TRADE AND INVESTMENT DEVELOPMENT  
(i) New trend in trade development 
59. In 2010 and 2011, China's total merchandise im ports and exports reached US$2,974 billion 
and US$3,642 billion, up 34.7% and 22.5% year-on-y ear respectively, of which, exports in 2010 and 
2011 were US$1,577.75 billion and US$1,898.5 b illion, up 31.3% and 20.3% year-on-year 
respectively, and imports were US$1,396.25 billi on and US$1,743.5 billion, up 38.8% and 24.9% 
year-on-year respectively.  
60. The development of China's merchandise trade in the past few years has shown some new 
features.  First of all, growth in imports outpaced  that of exports noticeably, resulting in continuous 
decline in the surplus in trade in goods.  China's su rplus in trade in goods began to decline gradually 
after hitting the record high of US$298.1 billion in  2008.  In 2009, 2010 and 2011 the surplus was 
US$195.7 billion, US$181.5 billion and US$155 billi on respectively, down 34.4%, 7.2% and 14.6% 
year-on-year.  In 2010 and 2011, China's surplus in trade in goods accounted for 6.1% and 4.3% of its 
total imports and exports, and 3. 0% and 2.1% of the GDP.  Among the 9 countries with the largest 
trade balances, including surplus and deficit, Chin a was not prominent in terms of the two ratios. 
(Chart 3: Ratio of balance of trade in goods to GDP and to total imports and exports in 2010 for the 
9 nations having largest trade in goods balances). 
-25-20-15-10-50510152025ratio of balance of trade in
goods to GDP
ratio of balance of trade ingoods to total imports and
exports
Source:   Import and export from the World Trade Organization, and GDP data from the World Bank.Chart 3
Ratio of Balance of Trade in Goods to GDP and to Total Imports and Exports in 2010 for the 9 Nations
 WT/TPR/G/264 Trade Policy Review 
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  61. Second, the share of processing trade in total im ports and exports showed  an obvious trend of 
decline.  From 2009 to 2011, imports and export s under processing trade accounted for 41.2%, 38.9% 
and 35.8% respectively of the total imports and exports.  Of them, exports under processing trade 
accounted for 48.8%, 46.9% and 44% respectively of  the total exports, and imports under processing 
trade accounted for 32%, 29.9% and 26.9% respectively of the total imports. 
62. In contrast, general trade growth has been st rong.  From 2009 to 2011, imports and exports 
under general trade accounted for 48.2%, 50.1% and 52.8% respectively of the total imports and 
exports.  Of them, exports under general trade acc ounted for 44.1%, 45.7% and 48.3% respectively of 
the total exports, and imports under general trade accounted for 53.1%, 55.1% and 57.8% respectively 
of the total imports. 
63. Moreover, China's trade with emerging markets h as been strong, with the growth rate much 
higher than that with the traditional largest trading partners of the Eu ropean Union, the United States 
and Japan.  In 2010, the trade volume between Ch ina and ASEAN, Brazil, Russia, South Africa and 
India increased by 37.5%, 47.6%, 43.3%, 59.9% and 42.4% respectively, while trade with the European Union, the United States and Japan increased  by 31.8%, 29.2% and 30.2% respectively.  In 
2011, the bilateral trade between China and ASEAN, Brazil, Russia, South Africa and India increased 
by 23.9%, 34.5%, 42.7%, 76.8% and 19.7% respectively, and that with the European Union, the United States and Japan increased by 18.3%, 15.9% and 15.1%. 
64. Private enterprises saw a trade growth rate signifi cantly faster than the overall level.  In 2010, 
private enterprises exported US$431 billion, an incr ease of 44.8% and 13.5 percentage points higher 
than the overall exports growth;  and their im ports was US$214.73 billion, an increase of 52.7%, 
13.9 percentage points higher than the overall impor ts growth.  In 2011, private enterprises exported 
US$579.74 billion, an increase of 34.5% and 14.2 pe rcentage points higher than the overall exports 
growth;  and their imports was US$293.87 billion, an  increase of 36.9%, 12 percentage points higher 
than the overall imports growth. 
65. Trade in services continued its rapid developmen t, but the long-standing deficit situation has 
not changed.  In 2010 and 2011, China's total imports and exports of services was US$362.4 billion 
and US$419.1 billion respectively, an increase of 26.4% and 15.6%.  The deficit was US$21.9 billion 
in 2010, and US$54.9 billion in 2011. 
(ii) Inward and outbound foreign direct investment 
66. In 2010, foreign direct investment in China rose steadily.  The number of newly approved 
foreign-invested enterprises in non-financial s ectors was 27,406, up 16.9% year-on-year;  and the 
realized value of foreign investment amounted to  US$105.74 billion, up 17.4% year-on-year and for 
the first time exceeding US$100 billion, registering a record high.  In 2011, the realized value of 
foreign investment in non-financ ial sectors amounted to US$116.01 billion, up 9.7% year-on-year, 
setting another new record;  and the number of ne wly approved foreign-invested enterprises was 
27,712, up 1.12% year-on-year. 
67. The sectoral distribution of foreign investment continued to be optimized.  In 2010, paid-in 
foreign capital in the service sector (the financia l sector excluded) reached US$48.71 billion, up 
28.6% year-on-year, achieving an increase much highe r than the 6% increase in the paid-in foreign 
investment in the manufacturing sector, and the realiz ed investment in the service sector accounted for 
46.1% of the total, close to 46.9% of the manufactur ing sector.  In 2011, the realized foreign capital in 
the service sector reached US$55.24 billion, up 13.4% year-on-year, again significantly higher than China WT/TPR/G/264 
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  the 5% increase in manufacturing over the same period,  and its share in the total actual use of foreign 
investment rose to 47.6%, for the fi rst time exceeding that of manufacturing, which in the year stood 
at 44.9%. 
68. Foreign investment in central and western regi ons took on a momentum of acceleration.  In 
2010, the actual use of foreign investment in Chin a's eastern, central and western regions accounted 
for 85%, 6.5% and 8.5% respectively in the country's  total, which was 1.2 percentage points lower, 
0.6 percentage points higher and 0.6 percentage poi nts higher compared with that in 2009.  In 2011, 
the actual use of foreign capital in eastern, central  and western regions accounted for 83.3%, 6.8% and 
10% respectively in the country's total, which was 1.7 percentage points lower, 0.3 percentage points 
higher and 1.5 percentage points higher than in 2010. 
69. China's overseas direct investment grew steadily.  In 2010, the non-financial direct investment 
made by investors from mainland China went to 129 countries and regions and amounted to US$59 billion.  In 2011, the same investment re ached US$60.1 billion, involving 132 countries and 
regions.  As of the end of 2011, China had cumu latively made US$322 billion non-financial overseas 
direct investments in a total of 178 countries and regions.  Investors from Zhejiang Province, 
Shandong Province, Jiangsu Province, Guangdong Province and Shanghai Municipality were 
particularly active. 
70. By the end of 2010, China's outbound invest ment had involved all sectors of a national 
economy, major sectors including business services (U S$97.25 billion or 30.7%), financial services 
(US$55.25 billion or 17.4%), mi ning industry (US$44.66 billion or  14.1%), wholesale and retail 
(US$42.01 billion or 13.2%), transportation servi ces (US$23.19 billion or 7.3%) and manufacturing 
sectors (US$17.8 billion or 5.6%).  
(2) P
ROMOTING BALANCED AND SUSTAINABLE DEVELOPMENT OF TRADE AND INVESTMENT  
71. China has entered a new stage of opening up in which the status and role in the national 
economy of import and export as well as inward and out bound investment have profoundly changed.  
In the face of the new situation, the Chinese Gove rnment pays more attention to the balanced, 
coordinated and sustainable devel opment of trade and investment. 
(i) Striving to balance the growth of imports and exports 
72. China's trade in goods has shifted from export- oriented to having e qual emphasis on import 
and export.  The Chinese Government does not purs ue a foreign trade surplus intentionally.  The 
long-standing surplus of China's trade in goods is th e natural result of the country's full participation 
in the global production chain.  While China enjoys a trade surplus with end consumer markets, it has 
long-term trade deficit with major producers of intermediate and primary products.  Moreover, 
foreign-invested enterprises and processing trade are the main sources of China' s surplus of trade in 
goods. 
73. The Chinese Government has comm itted to the balanced development of import and export.  
In the past two years, in accordance with the requirements of expanding domestic demand and 
accelerating the transformation of the pattern of economic development, the Chinese Government in 
adhering to the principle of having equal emphasi s on import and export, made further efforts in 
import expansion so as to optimize the structure of trad e balance and to give better play to the role of 
import in macroeconomic rebalanc ing and economic restructuring. WT/TPR/G/264 Trade Policy Review 
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  74. In recent years, the Chinese Government has annually implemented interim tariff rates on 
certain imported products which are lower than the applied MFN rates.  In 2010 and 2011, over 
600 products at HS 8-digit level enjoyed the lower inte rim tariff rates each year.  In 2012, in order to 
further increase imports, promote economic restructuring and satisfy the consumption needs of the 
people, application of the interim import tariff rates is extended to more than 730 tariff items, with the 
average tariff rate standing at 4.4%, which is more than 50% lower than the applied MFN rate. 
75. Furthermore, in order to increase the import of key components and spare parts of major 
technical equipment and related raw materials, starting from 1 July 2009, the Chinese Government 
introduced tax incentives by exempting import tariff s and import VAT for such products.  This helps 
to promote industrial restructuring, energy saving and emission reduction and to enhance the 
capabilities of domestic industries for sustainable development. 
(ii) Accelerating the transformation of foreign trade development pattern 
76. Along with the accelerating transformation of th e pattern of China's economic development, 
the way foreign trade develops needs to be adjusted  accordingly.  While continuing to make the most 
of the advantages in labor resources, China needs to further reduce the consumption of energy and 
resources, move higher up the industrial chains, and strive to transform from scale expansion to 
quality and profit improvement and from mainly relyi ng on low-cost advantages of resources, energy 
and labor force to enhancing comprehensive competitiv e edge.  In addition, China needs to vigorously 
develop trade in services including undertaking servi ce outsourcing and to increase the share of trade 
in services in its international trade.  
77. Transformation and upgrading of processing trad e has been accelerated.  In November 2011, 
Ministry of Commerce together with other relevant  ministries jointly issued a policy document on 
promotion of the transformation and upgrading of processing trade.  According to the policy document, the directions of the adjustment of proc essing trade include firstly, to achieve structural 
upgrading of both industries and products, i.e., wh ile prohibiting and restri cting products that 
consume too much energy and resources, cause seri ous pollution or contain only low-level processing, 
China will endeavor to improve the technical cont ent of the processing trade products;  secondly, to 
optimize regional distribution of processing trade an d to promote gradient transfer and reasonable 
adjustment of industrial layout among the eastern, central and western regions;  thirdly, to guide processing trade to move up the industrial chains, to extend from simple processing to designing, 
research and development, branding, services a nd other content, prol onging the domestic 
value-adding process. 
78. Export of products consuming too much energy and resources and causing serious pollution 
continues to be strictly controlled.  On the i ssue of export administration measures, it is not the 
intention of the Chinese Government to restrict or distort trade or to protect domestic industries.  The export administration measures on products of high energy consumption, high emission and pollution 
and products of exhaustible natural resources are an integral part of the ecological and environmental 
protection measures of the Chinese Government  to achieve sustainable development under 
intensifying pressure from resources and environm ental constraints.  They are simultaneously 
implemented with domestic explora tion and production restrictions.  The policy objective is legitimate 
and justified. 
79. Quality and safety requirements on export produc ts have been further stressed and enhanced.  
In recent years, the Chinese Government improve d laws and regulations on product quality and 
safety, strengthened supervision, and investigated and punished the few enterprises that had violated China WT/TPR/G/264 
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  law and caused quality problems to damage the reputa tion of Made in China.  In March 2011, China 
launched the Year of Improving th e Quality of Foreign Trade Products, through which mechanisms 
on approval, certification and superv ision of the quality and safety of foreign trade products would be 
further improved, thereby to enhance the effectiven ess and efficiency on safeguarding the quality and 
safety of export products. 
(iii) Improving trade financing and trade facilitation   
80. In July 2009, against the backdrop of the inte rnational financial crisis, the People's Bank of 
China launched the pilot program of using RMB in cross-border trade settlement in a bid to help 
enterprises evade the risk of drastic fluctuations  in the exchange rates of major currencies for 
international settlement, to facilitate  international trade and reduce tran saction costs.  Since then, the 
pilot program had progressed satisfactorily, its c overage extended, various relevant measures 
improved and the settlement size expanded.  In March 2012, all enterprises in China engaged in 
import and export trade of both goods and services as well as in other current account transactions 
were able to use RMB for quotation, settle ment and payment if they so wished. 
81. While advancing step by step the pilot program of settlement of cross-border trade in RMB, 
the People's Bank of China in January 2011 issued the Measures on Administration of Settlement of 
Overseas Direct Investment in RMB on Trial Basis, in a bid to facilitate the outbound direct 
investment of domestic enterprises.  In October 2011, the People's Bank of China issued the Measures 
on Administration of Settlement Services of Foreign Direct Investment in RMB.  The rule, bridging the existing administrative regime on foreign direct  investment, stated that overseas investors and 
related banks may handle settlement services for fo reign direct investment in China in RMB. 
Formalities of financial services for overseas invest ors to make investment in China were further 
simplified and facilitated. 
82. The People's Bank of China has also advanced  bilateral currency swap arrangements with 
central banks or currency authorities of relevant countries and regions.  By the end of March 2012, the 
People's Bank of China had signed bilateral currency swap agreements with central banks or currency 
authorities of 17 countries and regions, i.e. Republic  of Korea;  Hong Kong, China;  Malaysia;  
Belarus;  Indonesia;  Argentina;  Iceland;  Si ngapore;  New Zealand;  Uzbekistan;  Mongolia;  
Kazakhstan;  Thailand;  Pakistan;  United Arab Emirates;  Turkey;  and Australia.  These arrangements have played a positive role in safe guarding regional financial stability and facilitating 
trade and investment.  
83. The Chinese Government has continued its e fforts to improve facilitation of trade and 
investment in terms of procedures and formalitie s for Customs clearance, quarantine and quality 
inspection and foreign exchange administration.  The foreign exchange administration concerning trade in goods, trade in services and overseas i nvestment has undergone profound reform and has 
significantly reduced the operationa l costs of enterprises and banks. 
(iv) Promoting the growth of outbound investment 
84. With respect to investment, China is changi ng from focusing primarily on absorbing foreign 
investment to attaching importance to both inwa rd and outbound investment.  China has long been 
one of the major destinations for foreign direct  investment.  In comparison, China's outbound 
investment is still at an inception stage.  However, it has also registered rapid growth.  At the end of 
2009, China's cumulative outward direct investment accounted for 1.3% of the global total.  At the 
end of 2010 it went up to 1.6%, showing a momentum  of steady growth.  "Going global" of Chinese WT/TPR/G/264 Trade Policy Review 
Page 22 
  
  enterprises is the natural result of the developm ent of economic globalization.  It satisfies the 
enterprises' own needs to further develop, and refl ects also the requirement of further reform and 
opening up of the Chinese economy.  
85. With respect to outbound investment, China follows the principles of mutual benefit, 
pragmatic cooperation and common development, r especting the aspiration of host countries for 
development and giving full play to each other' s advantages to promote the economic and social 
development of both sides.  China adheres to the principles of having enterprises playing the leading 
role and government offering guidance and assistance, enterprises making investment decisions independently out of their own will, and the G overnment focusing on creating favorable conditions 
and environment for enterprises through various supporting services.  China also follows the 
principles of promoting development and prev enting and controlling risks, enhancing the 
development level and coope ration quality of outbound investment and meanwhile raising the risk and 
safety consciousness of enterprises to effectively guard against damages. 
86. In 2009, the Chinese Government began to comp ile and thereafter updated on a yearly basis 
the Country (Region) Specific Guide for Outward Fore ign Direct Investment Cooperation.  The Guide 
was released online at the official website of the Ministry of Commerce.  It introduces investment 
environment in relevant countries and regions, and gives tips on points for attention for cross-border 
operation of Chinese enterprises.  The Guide currently online is 2011 edition which covers 
165 countries and regions. 
87. In August 2011, the Chinese Government issued  the Country (Region) Specific Guidelines on 
Industries for Outward Foreign Direct Investment  (2011 edition).  The Guidelines was compiled in 
accordance with the economic development plans and the information from government agencies 
including foreign investment authorities of relevant countries and regions.  It introduces priority areas for foreign investment, main industrial developm ent objectives, key regions for development and 
situations of relevant industries in 115 countries and regions, providing much public information for 
Chinese enterprises so that they can better combine their cross-border business strategy with the 
development needs of host countries, and promoting greatly the sustainable development of China's 
outward investment. 
88. In March 2011, the Chinese Government issued  the Guidelines for Employee Administration 
of Overseas Chinese-Funded Enterprises (Institutions).  It is proposed in the Guidelines that Chinese 
enterprises uphold the business concept of mutual be nefit and common development in their overseas 
investment, promote localized operation with job op portunities offered to local people to the extent 
possible.  Chinese enterprises are also required to r ecruit local employees strictly in line with the law 
of the host country, and provide wages, benefits, so cial insurance and labour protection for employees 
according to law.  Chinese ente rprises are also advised to estab lish sound communication mechanisms 
with employees, industry associations and gove rnment agencies in host countries to resolve 
differences or disputes through friendly consultations. 
(3) O
PTIMIZING THE UTILIZATION OF FOREIGN INVESTMENT THROUGH FURTHER OPENING 
UP 
89. Utilizing foreign investment has always been an important part of China's basic state policy of 
opening up to the outside world.  Since adoption of the reform and opening up policy in the late 1970s, as the opening-up of the Chinese economy has deepened, foreign-invested enterprises have 
already become an important and integral part of  the Chinese economy.  They have promoted market 
competition, industry upgrading and technology a dvance in China, and have made important China WT/TPR/G/264 
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  contributions to China's economic and social de velopment.  Currently, when China's opening up 
enters into a new stage, China will continue to give  play to its comparative advantages, create a more 
open and more optimized investment environment and constantly improve the quality and level of 
utilization of foreign investment. 
(i) Foreign investment policy direction 
90. In April 2010, the State Council issued the Opinions on Further Improving the Use of Foreign 
Investment.  In light of the requirements to  accelerate the transfor mation of the economic 
development pattern and to realize sustainable, st eady yet robust economic development, the Opinions 
proposed to open up more areas to foreign investment  and to optimize foreign investment structure.  
Foreign investments are encouraged to go to high-end manufacturing, hi gh and new technology 
industries, modern services, new sources of ener gy and energy-saving and environment protecting 
industries.  They are encouraged to move to cen tral and western regions with increased investment 
and to develop in these regions  labour intensive industries meeting environment protecting 
requirements. 
91. The Opinions also proposed to diversify ap proaches and means for utilization of foreign 
capital, and encouraged foreign investors to par ticipate in the restructuring, transformation and 
reorganization of domestic enterprises by way of  merger and acquisition.  Reform of foreign 
investment regime should be deepened to sort  out administrative licensing and further improve 
transparency.  Investment promotion should be stre ngthened and investment facilitation be enhanced, 
so as to further improve the investment environment. 
(ii) Opening up more fields to foreign investment 
92. In December 2011, the Chinese Government i ssued the Catalogue for the Guidance of 
Industries for Foreign Investment (2011), which came into force on 30 January 2012.  This was 
another amendment to the Catalogue after the prev ious one done in October 2007, aiming at opening 
up more fields to foreign investment. 
93. The newly amended Catalogue listed a total of 473 items, among which 354 items belonged 
to the encouraged category, an increase of 3 items from the previous Catalogue; 80 items fell into the 
restricted category, a decrease of 7 items from the previous Catalogue;  and 39 items were classified as the prohibited category, 1 item less than in the previous Catalogue.  At the same time, the new 
Catalogue also cancelled equity restrictions in so me fields.  As a result, equity requirements for 
11 items in the encouraged and restricted cat egories disappeared after the amendment.   
94. In the course of amending the Catalogue, atten tion was particularly given to its consistency 
with the commitments made by China in the WT O.  For sectors and industries that China had 
committed to open up in the WTO, no new access rest riction was imposed in the amended Catalogue.  
On top of that, the amended Catalogue also rea lized autonomous opening-up in certain areas. 
95. In addition to the above, in August 2010 , the Interim Measures for Supervision and 
Administration of the Pilot Operation of Outbou nd Tourism Business by Sino-foreign Joint Venture 
Travel Agencies was promulgated.  Since then, outbound tourism service for residents in mainland China has been open to foreign-funded travel agencies  on a trial basis.  In the financial services sector, 
investment in China's interbank RMB bond market by overseas commercial banks and central banks 
has been steadily advanced, and de tailed rules are being drafted on the opening-up of the compulsory 
third party auto liability insurance to fore ign-funded non-life in surance companies. WT/TPR/G/264 Trade Policy Review 
Page 24 
  
  (iii) Improving further the licensing regime for foreign investment 
96. In June 2010, the Chinese Government delegate d to the governments at provincial level the 
authority to examine and approve certain foreign investment projects including those in the encouraged and permitted categories with the tota l investment amounting up to US$300 million.  In 
July 2010, the Chinese Government cancelled or re formed a series of other approval procedures 
concerning foreign investment, including for exam ple those for foreign-invested enterprises to 
establish branches within China.  These efforts further improved the level of facilitation for foreign 
investment. 
97. In 2011, the Chinese Government established the security review mechanism for mergers and 
acquisitions of domestic enterprises by foreign investor s in line with interna tional common practices.  
The specific implementation rule was promulgated ba sed on extensive solicitation of public opinions.  
The administrative system on mergers and acquisiti ons by foreign investors in China was further 
improved. 
(iv) Caring for and protecting rights and interests of investors 
98. The Chinese Government has always attached great importance to communications with 
investors to listen to their views and opinions on inv estment environment.  Since the last review, the 
Chinese Government has worked on a series of issues that  were of interest to investors.  With respect 
to the issue of fair competition between domestic  and foreign-funded enterprises in the national 
innovation initiative, the Chinese Government has made it clear that in recognizing and accrediting innovation products foreign-funded enterprises and their products would be treated equally as 
domestic enterprises and their products.  With resp ect to the issue of compulsory transfer of 
technology, the Chinese Government has confirmed th at laws and regulations stipulating compulsory 
transfer of technology had been amended at the time of China's WTO accession with all such 
stipulations annulled.  Technical  cooperation and technology transfer are now behaviors of enterprises 
out of their own will, and the Chinese Governme nt will not take them as precondition for market 
access.  In terms of IPRs protection, the Chin ese Government has responded with the nationwide 
special campaign of cracking down on infringements of IPRs to effectively rectify market order and 
protect the rights and interests of investors. 
(4) C
ONSTRUCTING ECONOMIC AND TRADE PARTNERSHIPS BASED ON MUTUALLY 
BENEFICIAL AND WIN-WIN PRINCIPLE  
99. China has been committed to developing all -round foreign economic and trade relations. 
China is willing to carry out practical cooperation w ith all countries and regions, large or small, rich 
or poor, to draw on each other's merits for complementation, to bring into play each other's respective advantages in a bid to achieve mutual benefits and win-win results. 
100. China believes that economic and trading pa rtners should keep on enhancing mutual 
understanding, especially understanding on each othe r's national conditions, development needs and 
development objectives.  With respect to frictions and disputes, China has always preferred dialogue 
to confrontation and cooperation to pressure, and c hooses to have them settle d through consultations 
and negotiations by gi ving full consideration to the interests of  all parties and in the spirit of seeking 
common ground while shelving differences.  When consu ltations fail to settle a dispute, China, as a 
WTO Member, will seek to handle the issue appropria tely with its trading partners through the WTO 
dispute settlement mechanism. China WT/TPR/G/264 
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  101. China opposes protectionism in all forms, object s to politicizing trade and investment issues, 
and stands against sticking to old mentality, exer cising discriminatory practices in investment and 
trade remedy and unilaterally im posing unreasonable restrictions. 
(i) Committed to advancing the Doha Development Agenda 
102. China is deeply concerned on the impasse of the Doha Development Agenda (DDA) 
negotiation despite the full engagement by the WTO Members in advancing the negotiation since 
2009.  China firmly believes that in the context of serious uncertainties faced by the world economy, 
the early conclusion of the DDA will bring more tr ade, investment and employment opportunities, 
foster a more stable and open trade environment, further enhance the role played by the multilateral 
trading system in global governance and promote the recovery and steady growth of the world 
economy.  
103. The Chinese Government attaches high impor tance to the DDA negotiation.  When the 
negotiation is confronted with severe difficulties, Chinese leaders call on all parties to show political 
will and make concerted efforts to promote the ear ly conclusion of the DDA with a comprehensive 
and balanced outcome on various occasions including the Group of Twenty (G20) Summit, 
Asia-Pacific Economic Cooperati on (APEC) Economic Leaders' Meeting, the BRICS Summit as well 
as bilateral high-level visits.  It is also reitera ted in the 2012 Report on the Work of the Chinese 
Government to the National People's Congress that Chin a will continue to play a constructive role in 
the DDA negotiation.  
104. China has always been an ac tive participant in the DDA negotiation, playing a constructive 
role in the negotiation through WTO ministerial c onferences, informal ministerial meetings and 
various consultations at senior official level.  Chin a, together with other members, made great efforts 
in leveraging the so-called "2011 window opportuni ty" to achieve an "early harvest" of the DDA.  
Thanks to concerted efforts of all parties, seven consensuses were re ached for the DDA at the 
Eighth WTO Ministerial Conference in December  2011, safeguarding the DDA development mandate 
and the progress already achieved. 
105. China remains committed to the realization of the development goal of the DDA.  China will 
join efforts with other Members, in accordance with the Doha mandate and based on the progress 
already made, to explore feasible approaches to fulf il the consensuses of the Eighth WTO Ministerial 
Conference by advancing first the negotiations in areas that are politically less controversial and 
technically more mature such as the concerns of LDCs.  At the meantime, the resolution of 
outstanding issues shall be expedited to conc lude the DDA single undertaking and realize the 
development goal.  China is open to new approaches that will help advance the negotiation, but insists 
that any such approach shall take developmen t as the core, single undertaking as the goal and 
multilateralism as the main channel.  It is hard to  believe that developing members will have the will 
and confidence to address new issues before  the successful conclusion of the DDA.  
106. On agriculture, China is of the view that  the pressure faced by developed members and 
developing members are fundamentally different.  Ch ina's agriculture tariff has already been reduced 
to a very low level.  China has no agricultura l export subsidies and only provides a very limited 
amount of domestic support at de minimis  level.  China upholds the position to substantially reduce 
trade-distorting domestic support by developed memb ers, substantially reduce the relatively high 
tariffs and tariff escalation, and provide sufficient a nd effective special and differential treatment to 
developing members so as to address their concerns  on food security, livelihood of rural population 
and rural development. WT/TPR/G/264 Trade Policy Review 
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  107. With respect to NAMA, China believes that the negotiations modalities contained in the 
Chairman's draft modalities paper dated Decemb er 2008 could achieve the goal and fulfil the 
ambitious level of NAMA.  China supports to resume  the negotiations on such basis.  Negotiations on 
sectorals should be carried out on a voluntary basis and in accordance with the mandate contained in 
the Hong Kong Ministerial Declaration and should focus on the products of export interests to 
developing countries.  
108. Rules negotiation is an important element of the DDA.  It should contribute to further 
clarifying and improving the WTO rules, tightenin g disciplines on investigation in trade remedy, 
increasing transparency, and preventing and reducing th e abuse of trade remedy measures, especially 
the abuse by developed members against developing ones.  
109. China welcomes any exploration that contri butes to advancing multilateral negotiation on 
trade in services in line with the principle of tr ansparency and inclusiveness.  China pays high 
attention to the possible systemic impacts on the DDA by plurilateral service negotiation initiative 
pursued by some Members.  Chin a is ready to advance the negotia tions on trade in services through 
multilateral approach and is willing to make concerted efforts with other Members.  
110. China attaches great importance to the solutio n of LDC concerns, in cluding on "duty-free 
quota-free" treatment and the cotton issue, and rega rds it a key step forward in realizing the Doha 
development goal.  China supports giving priority to  making progress in areas like trade facilitation to 
advance the process of global trade liberalization.  
(ii) Safeguarding the multilateral trading system with concrete actions 
111. The year 2011 marks the 10th anniversary of China's WTO accession.  Over the past 10 years, 
China has fully honoured its extensive commi tments of WTO accession and made important 
contributions to safeguarding the multilateral tradi ng system.  China's average tariff rate was reduced 
from 15.3% to 9.8%, which was already lower than the average level of developing members.  China 
eliminated all non-tariff barriers inconsistent with th e WTO rules, fully liberalized trading rights, and 
substantially improved investment and market access in agriculture, manufacturing and service sector.  
China also made enormous efforts in sorting out and amending laws and regulations, and the stability, 
transparency and predictability of China's trade regime and policies have been greatly improved. 
112. China has earnestly and actively participated in  the functioning of the WTO and respected the 
decisions of the Dispute Settlement Body concerning  the trade disputes between China and its trading 
partners.  Since the outbreak of the internationa l financial crisis, China has supported the WTO in 
launching the monitoring and surveillance of trade measures and playing a crucial role in curbing 
protectionism. 
113. In the course of developing and implementi ng economic and trade policies and measures, 
China has attached great importance to their consis tency with the rules and its obligations in the 
multilateral trading system.  China has endeavored to make reference to practices of other WTO 
Members and take into account possible impacts on the external world. 
114. China has actively responded to the Aid for Trade initiative of th e WTO.  China continues to 
provide assistances bilaterally to the best of its ability to other developing countries and upraise the 
level of South-South cooperation.  Meanwhile , in the multilateral framework of WTO, China 
contributed a total of US$600,000 to the Aid fo r Trade initiative in three consecutive years since 
2008.  In 2011, China contributed another US$400,000 and established "China's LDCs and 
Accessions Program" (China program) to help LDCs effectively participate in and benefit from the China WT/TPR/G/264 
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  multilateral trading system and to support those LDCs applying for WTO membership to accelerate 
the accession process.  With the su pport of the program, the WTO Secretariat will hold a LDCs 
round-table on WTO accession in Beijing from 29 May to 1 June 2012.  During the Eighth WTO 
Ministerial Conference, China and major cotton pr oducing countries in Africa initiated their cotton 
cooperation within the WTO framework, and Chin a would provide superior seeds, chemical 
fertilizers, agricultural machinery, technologies and training of professionals to these cotton producing countries.  
115. China has always been workin g with sustained efforts on its accession to the Agreement on 
Government Procurement (GPA).  In Novemb er 2011, China submitted to the WTO its second 
revised offer covering certain sub-central entities and conducted in-depth consultations with GPA 
parties, which substantially moved forward the negotia tions.  China will continue its efforts to accede 
to the GPA at an early date. 
(iii) Promoting regional and bilateral cooperation 
116. While committing to the multilateral trade system and its rules as the cornerstone of its 
foreign economic and trade relations, China has also  attached importance to promoting bilateral and 
regional economic and trade cooperation.  Curre ntly over 150 countries and regions have signed 
agreements on bilateral trade or economic cooperation with China.  China has witnessed steady 
growth in its trade with developed countries a nd realized complementary advantages as well as 
reciprocity and mutual benefit.  China's trad e with developing countries including the emerging 
markets is experiencing robust growth, and there are huge development potentials to be further 
explored. 
117. With respect to regional economic integrati on, as of the end of 2011, China had held 
15 negotiations on either free trade agreement, or  closer economic partnership arrangement, or 
economic cooperation framework agreement with 28 countries and regions, with 10 of them signed 
and/or implemented.  Currently 5 negotiations are still under way. 
118. China is also an active partic ipant in the Asia-Pacific Econom ic Cooperation, the Association 
of Southeast Asian Nations (ASEAN) meetings with China, Japan and the Republic of Korea, the East 
Asia Summit, Forum on China-Africa Cooperation, Greater Mekong Sub-region Economic Cooperation Committee, Central Asia Regional Economic Cooperation Committee, Greater Tumen 
Initiative, and other regional and sub-re gional economic coope ration mechanisms. 
(iv) Enhancing South-South cooperation 
119. China is a developing country and shares th e common desire of developing countries to 
realize people's right to development.  Therefor e, China has always committed to expanding the 
South-South cooperation, including providing assistan ce to the best of its ability to other developing 
countries to help recipient countries consolidate their self-developing capacity, enrich and improve 
people's livelihood, and promote economic growth and social progress. 
120. China is one of the developing countries granti ng the biggest market access to LDCs.  As of 
the end of 2011, China had granted zero-tariff to  over 4,700 products at HS 8-digit level from 
41 LDCs which had established diplomatic ties w ith China, which accounted for about 60% of 
China's total HS 8-digit tariff items.  In November 2011, President Hu Jintao announced at the G20 Summit in Cannes, France that Chin a will, in the context of South-South cooperation, give zero-tariff 
treatment to 97% of the tariff items of exports to  China from the LDCs having diplomatic ties with 
China. WT/TPR/G/264 Trade Policy Review 
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  121. Implementation of the zero-tariff arrangements has greatly boosted the exports of LDCs to 
China.  Since 2008, China has been the largest expor t market for LDCs.  According to WTO statistics, 
in 2010, China's import of goods from LDCs increa sed by 58% over the previous year, accounting for 
approximately one quarter of the total exports of LDCs. 
122. In September 2010, Premier Wen Jiabao in attending the UN High-Level Meeting on the 
Millennium Development Goals (MDGs), proposed a ser ies of specific measures to be adopted by the 
Chinese Government to unconditionally help fe llow developing countries promote economic and 
social development.  These include to further cancel  all the unpaid interest-free government loans that 
were due in 2010 owed to China by 50 heavily indebt ed poor countries and LDCs, to dispatch another 
3,000 agricultural experts and technicians to these countries, to train 80,000 more professionals in 
various fields for other developing countries and to  continue the provision of aid funds to other 
developing countries for development projects incl uding infrastructure construction.  These measures 
will surely play a very positive role in improving the trade and development capacity of LDCs and 
deepening South-South cooperation. 
(5) CONTRIBUTION OF THE TRADE DEVELOPMENT OF CHINA TO THE WORLD ECONOMY  
123. The development of China's foreign trade has accelerated the modernization of the national 
economy, and improved the standard of living of more  than 1.3 billion Chinese people.  It has also 
helped integrate the Chinese economy into the wo rld economy, and promoted the common prosperity 
of all countries and regions in the world. 
(i) Promoting the growth of the world economy 
124. China's reform and opening up and its active participation in econom ic globalization have 
made the country one of the world's fastest-growi ng economies.  Over the past 10 years since its 
accession to the WTO, China, along with other developing countries, has become an increasingly important force propelling world ec onomic growth.  According to th e International Monetary Fund 
statistics, from 2001 to 2011, China's GDP increased  by US$5.97 trillion, representing 15.9% of the 
increase in the world aggregate, and the share of China's GDP in the world rose to 10.5% over the 
same period.  Data from the WTO shows that from 2005 to 2011, the average annual growth rates of 
China's exports and imports were 16% and 18% r espectively, much higher than the 10% and 9% 
annual growth rates of global export and import in the same period.   
(ii) Improving the welfare of the people in all countries 
125. In the course of the economic globalization, China has gradually developed into a major 
producer and exporter of industrial products relying on its labor co st advantage, relatively strong 
industrial supporting, processing and manufacturing capabilities, and constantly-increasing labor 
productivity.  It provides inexpensive and quality commodities to meet the diverse demands of the 
international market.  China's advantage due to economies of scale and low processing costs in the 
global manufacturing industry partially offsets the rising prices of upstream factors of production, 
playing an important role in curbing global inflation and raising the real purchasing power of 
consumers of its trading partners. 
(iii) Providing broad market for trading partners 
126. While China became the world's largest exporte r, it also became th e world's second-largest 
importer.  Since 2001, China's import of goods has increased by approximately five times, 
representing an annual growth rate of around 20%.  In the next five years, China will import at least China WT/TPR/G/264 
 Page 29 
 
 
  US$8 trillion worth of commodities.  China has beco me the largest and the most important export 
destination of many WTO Members.  As Chin a's industrialization and urbanization are moving 
forward rapidly, and its domestic demand keeps gr owing, China will soon become one of the world's 
largest consumption market, and offer incr easing opportunities to its trading partners. 
IV. THE WAY FORWARD  
127. Over the last 30 years after reform and openi ng up, China has maintained rapid GDP growth, 
expanded constantly the size of the economy and improve d significantly people's standard of living.  
Despite of the remarkable achievements in the c ourse of development, in 2010 China's per capita 
GDP still ranked around 100th among all countries and regions in the world.  China's modernization 
process is a modernization process for one fifth of the world's population.  The scale and magnitude of 
the difficulties and problems involved are unprecedented in the present world.  China will remain for 
a long time a developing country facing numerous and heavy development tasks, and therefore will 
continue to adhere to handling its own matters well.  This in itself is  the most important fulfilment of 
China's international responsibility and also the most  important contribution to human development.  
128. Under the current circumstances, guided by the principle of making progress while 
maintaining balance and stability, the Chinese G overnment needs to keep handling well the 
relationships among maintaining st eady and robust economic growth, restructuring the economy and 
managing inflation expectations.  China not onl y needs to realize steady and rapid economic 
development, prevent the occurrence of major fluctu ations and maintain the overall price level stable, 
but also needs to make real progress in accelerating the transformation of the economic development 
pattern so as to lay a solid foundation for long-term and sound development of the economy.  
Accelerating the transformation of the economic deve lopment pattern is both a long-term task and a 
pressing issue at present. 
129. In the medium and long run, the Chinese Govern ment is confident in maintaining steady and 
robust growth of the economy.  After 30 years of  reform and opening up, China has in place solid 
material foundation and institutiona l conditions for future developmen t.  Enterprises are used to the 
market economy environment and ru les and have their competitiveness significantly strengthened.  
Infrastructures are greatly improved.  Human res ources are rich.  The workforce is more skilled.  
China also has ample supply of capital, a sound financial system and excellent fiscal position. 
130. More importantly, with the more than 1.3 billio n population, China has a huge market and its 
development potential will be constantly unleashed .  The fundamental impetus for economic growth 
will not diminish in a fairly long period of time.  In the historical course of constantly improving the 
livelihood and well-being of more than 1.3 billio n Chinese people and realizing the development goal 
of building a moderately prosperous society set by the Chinese Government , there will be a steady 
flow of effective demands to support Chin a's strong and sustainable economic growth. 
131. Accelerating the transformation of the economic development pattern needs to rely on 
furthering the reform.  The Chinese Government will be more resolute and c ourageous in advancing 
the reform in all fields in an all-round way.  China not only needs to vigorously press ahead with 
reform of economic system, but also needs to prudently advance political reform and accelerate 
reform of the cultural and social management syst ems in order to eradicate deep-seated institutional 
barriers hindering the development of productivity and improve constantly the socialist market 
economy. WT/TPR/G/264 Trade Policy Review 
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  132. Accelerating the transformation of the economic development pattern also needs to rely on 
furthering the opening-up to the outside world.  The Chinese Government will implement a more 
proactive opening up strategy, expand and deepen co mmon interests with all parties concerned.  The 
Chinese Government will participate actively in  global economic governance and regional economic 
cooperation, oppose protectionism in all forms, and promote the development of a "balanced, 
inclusive and mutually beneficial" multilateral tr ading system.  The Chinese Government will work 
with its trading partners to address the various challenges facing the world economy and trade, to 
sustain a more balanced development of global trad e and better realize the goal of mutually-beneficial 
and win-win development. 
 
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